Trump's 'China first' policy

Beijing's multilateral diplomacy after US climate pull-out

by David Marsh in Beijing

Mon 5 Jun 2017

President Donald Trump's sympathies, real and alleged, with Russian President Vladimir Putin have attracted much attention. Another plausible candidate for a 'friend of Trump' accolade is President Xi Jinping of China. Many of Trump's actions since his inauguration are likely, directly or indirectly, to strengthen Beijing's international position.

Trump's decision to pull out of the Paris climate change accord weakens overall momentum behind lowering carbon emissions. But the US move to retreat from leadership in this and other spheres, such as trade, may reinforce China's ability to move forward with a variety of 'soft power' measures. While advocating 'America first', Trump may become instrumental in promoting China on the world stage.

In anti-climate change efforts, China will not be seeking frontline leadership. Instead, it will be advancing surreptitiously using traditional multilateral diplomacy backed by grants, credits and technological commitments. As one Chinese official put it, 'There is a vacancy, there is a place [for China]. The world has to move forward.' He added: 'Climate change is financially and technically very complex. China cannot simply take over. The US and China have been working together. China alone can't do that. We need Europe, we need emerging markets – we need a set of proper governance measures.'

Washington's step back from a liberal approach to international commerce opens a vacuum that Beijing is trying to fill. On 17 January in Davos at the annual meeting of the World Economic Forum, Xi announced, 'We must promote trade and investment, liberalisation and facilitation through opening up – and say No to protectionism.' In contrast, in his inauguration speech three days later, Trump stated, 'Protection will lead to great prosperity and strength.' Likewise, Trump's withdrawal from the 12-nation Trans-Pacific Partnership has been widely interpreted as giving China a new instrument to forge closer trade ties with countries in its region – and even to supplant the US role in the Pacific Rim.

Trump's climate change pronouncement provides China with additional leverage. One possible route for China is analogous to its multidimensional policy over the Belt and Road initiative. The initiative involves developing infrastructure primarily across Asia and Europe, also spreading to Australasia and East Africa, encompassing around 60 countries.

This goes beyond a colossal programme to build continental-scale roads, railways, ports and other trade facilitation structures, involving investment over several decades and from a variety of sources of between $4tn-$8tn. As Chinese officials make clear, the initiative is designed, too, to encourage further international use of the renminbi as an investment, payments and transaction currency. The long-term aim is to build a Chinese-style financial regulatory and banking system in countries in the Belt and Road. This meets a threefold objective: to strengthen economic and financial systems; to safeguard Chinese credits and investment across this widespread region; and to provide opportunities for Chinese expansion in financial services.

In climate change, China could take a similar approach, with efforts to harmonise regulatory standards in fields ranging from green bond issuance to solar energy installations. Europe and China have agreed a 'green alliance'. There is room for China to propel the United Nations commitment to cut emissions by 26% from 2005 levels by 2025. Michael Bloomberg, the former New York mayor, said after meeting French President Emmanuel Macron on 2 June that US cities, states, universities and businesses would inform the UN they aimed to honour the US commitment. Jerry Brown, governor of California, has been in China in the last few days to talk to political and business leaders about coordinating new green technologies being produced by Chinese manufacturers.

China Investment Corporation, the Chinese sovereign fund, which has been examining the vaunted $1tn Trump infrastructure programme, is exploring whether Trump's disavowal of the Paris agreement is a possible opportunity for building co-operation in the US at a state and municipal level. These are all valuable channels for bypassing Trump's Washington. Over time, 'America first' may turn out as 'China first'.